Although Majid Al Futtaim's earnings growth slowed last year, the conglomerate is on track to double in size by 2020 as it pursues opportunities including opening cinemas in Saudi Arabia and more Carrefour stores in Sub-Saharan Africa, its chief executive said on Wednesday.
MAF, whose business interests include owning and operating shopping malls such as Mall of the Emirates and the development of residential communities, said on Wednesday its annual earnings grew 1 per cent year-on-year in 2017, compared with 8 per cent growth in 2016 from a year earlier. In January 2015, it said it planned to double in size in five years by increasing investments across countries and sectors.
"We think the Saudi market is a great market. It has a lot of potential and we are very happy with the reforms that are happening there," said MMAF chief executive Alain Bejjani. "With regards to Africa, we are in Kenya and we are looking to expand beyond Kenya as well."
MAF, the operator of Carrefour stores in the Middle East and Kenya, has been on a buying spree, snapping up Retail Arabia's Geant supermarket stores last June for an undisclosed sum and investing in Dubai consumer technology app Fetchr as part of a $41 million funding round. It made an 11th-hour bid last year for Souq, but lost to Amazon, which bought the e-commerce company for $580m.
The operator of 22 shopping malls across the Arab world said currency devaluation in Egypt in November 2016 impacted its Ebitda, which reached Dh4.2bn last year, while revenue grew 8 per cent to Dh33.2bn. At constant foreign exchange rates, group revenue would have grown by 14 per cent and ebitda by 5 per cent, the firm added. The Egyptian pound has lost nearly half of its value since the currency was devalued in November 2016.
Mr Bejjani said 2018 will be “a good year” for both top and bottom lines of the company. “We are starting to see a number of good leading indicators in 2018," he said. "We had a good growth in tourists coming [in 2017]. I think this is going to continue. We are seeing a comeback of the luxury retail that started six months and I think that will also continue.”
In Egypt, the market is recovering from the devaluation of the pound as the government implements a series of reforms in the wake of securing a $12bn IMF aid package.
“In Egypt structural reforms that are taking place in the country are starting to bear fruit and they were extremely important to materialise,” he said.
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MAF is scouring for acquisitions and pursuing organic growth to boost its revenue. Brick and mortar operators in the region are facing increasing competition from new disruptive businesses and the rise of e-commerce, forcing them to invest more in digital strategies, as the traditional model of retail come under pressure with the pivot of consumers to buy online.
“We have talks that are ongoing [for acquisitions],” said Mr Bejjani, declining to identify the targeted sectors. “We continue to be very active on different fronts and 2018 will continue to see us quite active and seize the opportunity wherever it is.”
In 2016, MAF announced Dh30bn of investments in the UAE, which is likely to be in place by 2020..
The group revealed plans to open 10 new City Centre malls, six hotels, 28 cinemas, 40 Carrefour supermarkets and a 740,000 square metres master- planned community over the next 10 years, which will generate about 170,000 direct and indirect jobs.
MAF, which built the indoor ski slope in Mall of the Emirates, is launching a similar slope in Saudi Arabia as part of a 14bn Saudi riyal investment in the kingdom.
In Oman, MAF announced in 2016 a further Dh5bn investment over the next four years.
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Read more:
Majid Al Futtaim in talks with contractors to unveil new Dubai community
MAF plans doubling residential communities’ portfolio
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